RDWR - Earnings call 3 2023

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Operator

Welcome to the Radware conference call discussing third quarter 2023 results, and thank you all for holding.

As a reminder, this conference is being recorded, November 1, 2023. [Operator Instructions] I would now like to turn this call over to Yisca Erez, Director of Investor Relations at Radware. Please go ahead.

Yisca Erez

Thanks, Avi. welcome Third and Conference XXXX everyone, Call. morning, to Quarter Radware's Earnings Good

are and in today's Zisapel, and me third website. as Roy Joining today for kit President Relations financial as Chief the section Officer. A the our investor and are Guy Financial Chief Investor copy release of available press quarter statements well the Avidan, Officer; Executive of

and the amount to the in to files filings. SEC, you refer for March company's specifically difference with of forward-looking such revise limited company. the statement may Form We regarding financial general business forecast results as time last call, after XX, Radware's of time we such uncertainties, make forward-looking not that the date to made. future circumstances in commitment to the the performance in to or today's impact to other contribute XX-F annual conditions and and statements and projections the time from risks, reflect other products, from COVID-XX pandemic, our current subject severe During cause and documents changes changes that no forward-looking is company from demand conditions, could are the future and industry, Radware's events the estimates. Factors ability of orders in changing XXXX. timing furnishes order our risks from the to or These statements or filed or differ report various materially economic are differences undertake include, statements address on actual We any on but to update or events could global and or

Roy turn the call will Zisapel. now I to

Roy Zisapel

today. for Yisca, thank and Thank all joining you, us you

results, Before operations. our I on address status the third update of you business financial I would to quarter like our

As of the kidnappings. resulting attacked on border October terrorist casualties Israel, southern know, many X, Hamas, the group, in and you

were their people Hamas. fighting free hostage injured, people the to that this ones, who to those the heart through being loved of had now people who and are goes all is the threat gone held the the who lost Our hostages, Israel remove and attack.

While to working assure business want interruption. are Radware's operations without place, this is you taking I that

centers Our with span XX all and running which multiple of support planned. security regions presence, technical points more cloud services, as than global are

resources have As reservists who been needed, reallocated for for we Israel force. employees have defense cover number internal called a for of the to

can be be they business You Israel that in should continuity to assured place required need the has within Radware all plans activated.

during for partners and support I would and their our with standing world the We the investors appreciate kind X thank like weeks. customers, around Israel. to truly words the you past

dimension a at Additionally, this the and has war forefront. is cyber standing Radware

we gather Israel's Furthermore, the We same of hackers critical we and who media are offices, are blocking are our organizations. customers, institutes as government some prominent intelligence Israel to protect targeting countries. infrastructure Western the banking are also using as attacks global for well attacking as

of ended cloud for $X.XX. with was like I'd strong third $XX million share non-GAAP earnings revenues results. third security that, and of on Last the We quarter financial to With you business. quarter our per quarter update quarter another

ARR and cloud quarter second XX% first in $XX.X XX% in XX% million, of the quarter Our accelerating growth year-over-year from increased XXXX. the to

enterprises. record and to midsized continue we including addition, customers, across In double-digit logos, new growth total bookings,

CAGR in confident growth ARR and a Our to XX% years. potential growth in cloud our huge, of the sustained ability is achieve coming we are

year. XX% third which revenue during to for from in last cloud total and growing quarter, recurring same period XX% compared subscription accounted last of year. in quarter in of also reflected revenue steady and XX% up Our the steadily total been the This XX% has revenue, the growth subscriptions, revenue, product for accounted as is

to company steady our peers. company. cloud cloud to in making are and security-as-a-service appliance security market offering a from an apparent becoming The our the is We progress more of in our strength transition

competitors, competitive decision $X situation in DDoS third because the total the the year-over-year $XXX their our third partnership our to million between companies. was terminate growing One approximately of of resulted appliances million million which using reduction an which in quarter, X% in service quarter This the to in compared ARR, of XXXX. totaled decided in our growth $XXX

from uptick this excluding nature increased competitive churn to this ARR quarters unique slight growth of X% the XXXX. year-over-year, second in relationship, quarter from due When ARR the X% previous of a

in as by ineffective. few In UBS, attacks marked Microsoft, X application last DDoS affected seen the traditional DDoS, many known dramatic bypass attacks, Enterprises such negatively these This and attacks. we've increase Layer also network-based Wells them Fargo quarters, encrypted web tsunamis. others big firewall a web were a threat rendering as by landscape the and shift all in high-volume

specifically cloud is to become for which new Our DDoS service, web a attacks, differentiator built protection us. combat strong market these has

attacks, weaponize algorithms stay solutions AI-powered automates the time our algorithms, AI AI-based block real with craft adaptive machine and application threats, and attacks of fight Artificial evolve XXX our customers Bad the area to with AI use disrupting change. traffic. AI. vulnerabilities of tools zero-day that new defenses these we learning-based protection help build emerging ahead in attacks without Radware botnets. an To legitimate is as for Radware. also actors intelligence and surgically our detect opportunity Using

security business, appliance in our cloud Alongside the business. growth challenging the continues macro environment tamper our to

in solutions. to the signs and large early deals, the other one ADC still encouraging. the hand, close security we and on-prem interest encounter We very see discussions CapEx customer positive stability hesitation are renewed on of On hand, and

On performance on the in continue our improving focus plan, Americas. to own the we execution

lot in have and our and that support to do, base, still will While resume are to customer confident work partnerships sales us a this of we we enable region. infrastructure growth

reflected last quarter and areas of already in in and are expenses, we've optimize to our expenses security. also our the call, operating cloud were These As $XX third our we such to on XXXX. investment actions support taken million highlighted actions which our align reallocate to high-growth as reduced

the logo share Europe. let close, with deal cloud I including few quarter. in They solution, examples replaced Before hybrid an security. sizable application a were solution. DDoS and incumbent signed of you one success security a our for complete looking banks me in largest new We center a data the of third We with

also portfolio. wanted closed the and a with Asia replaced multi-million security leading We in posture telecommunication dollar a enhance of energy deal and logo with its solution we This incumbent our services new provider Pacific. to

more. The a with center, medical deals, third was We a organization, signed financial utility service many a also U.S.-based and European successful Cisco. quarter European including institute, leading a many quarter and

our security we'll and execute to cloud business In our strategy. continue cloud summary, grown we have successfully

will to optimistic the of cautiously total year. large are the growth next in security we business. revenue return We the appliance about the recovery Together market, opportunities believe we with cloud

turn remain that, we expense to now I to will our to management. approach call addition, In Guy. profitability improving by committed disciplined With revenue over a driving taking the and

Guy Avidan

of Thank for quarter for results third you, business good day, XXXX, the quarter Roy, well XXXX. performance the everyone. as as of and our I'm fourth the financial provide outlook to of and analysis pleased our

in on all A to would today full financial issued $XX.X unless year. reconciliation our the a non-GAAP $XX.X was release on Before in million press same results remind XXXX GAAP million indicated, period section available earlier otherwise I that Investors earnings quarter website. Revenue our compared overview, is of of results non-GAAP. the and for to third last basis financial you like and the the are beginning of the

in of scrutiny. the The due which closing last the some service the and budget third resulted quarter was we of delaying We experiencing providers, of buying decline revenue environment pattern quarters. related in a to macro in that deals, believe delays the large are changes to pattern large the been few enterprise have and that on-prem

improvement in early better of we which in signs in witness XXXX. bookings and reflected QX business, quarter-to-date do compared the However, QX to are

for accelerated compared closing ARR million total quarter. Despite our the grew on-prem quarter in quarter the XX% $XX of $XX.X the in to last million. a increased to by business of was DDoS challenges year. in ARR It of one $XXX.X his XXXX. growth terminated our business for Total million ARR the end in its the Cloud QX growth with deals, revenue, accounted The in recurring compared remarks. XX% also compared by XX% which agreement third XXXX cloud to of to that at mentioned customers XX% X% ARR of large XX% third is Cloud reflected earlier impacted accounted of our in XXXX. our to third Roy year-over-year cloud

revenue Americas would improving decreased QX XX-month still basis. million, growth breakdown, decrease ARR mainly from quarter QX this on ARR million from in On million decline XXXX, $XX was XXXX, QX by of deals. representing million on-prem the of large X% X% extraordinary XX-month third trailing XX%. compared third On The $XX was year-over-year. decrease result the our original quarter XX% $X execution in of have XXXX, the the a on Excluding a of in a QX and XXXX Americas EMEA revenue been cooperation trailing decrease this in XX% year-over-year, to basis, region. is XXXX. in $XX We're XXXX in also in a in a revenue churn in working up

XXXX X%. in total quarter XX-month year-over-year. basis, XX% EMEA Finally, Americas APAC third total accounted of revenue for accounted the which increased $XX total XXXX. of of a third of accounted XX% XX% of revenue third an nearly for and revenue On by in was the increase the the quarter, remaining revenue APAC of quarter million, trailing APAC in for revenue, represents XX%

in gross and attributed margin I'll XXXX Gross decline in compared QX XX.X% the change period to is same now The discuss profit XXXX. revenue. was in margin mainly in in expenses. to XX.X% the

which drive drive to of by XX%. with margin We improvement of XXXX, signs will are early revenue about that level we believe growth and will in bookings, previous in gross encouraged

we to reduced macro operating the expenses, in a challenging As million, below this $XX and of the are environment. guidance. end expenses minded we ago, We approximately especially third quarter to few highlighted lower our quarters in prudent our our

expect of profitability the full expense We forward our was improve and of XXXX. quarter in reduction, continued which implemented to due cost going benefit discipline to third

structure operating that business expense the reduced and enable operate While we believe future to our expenses, the efficient is growth. we

the $X.X Financial share Radware's negative the a interest rates third was to year. $X.XX the was $X.X was in adjusted in $X.XX million third for million income and for Hawks grow to business. million same included the in $X.X in Diluted earnings quarter QX reached impact million last as of third the EBITDA the Net which compared compared quarter income market. of of result as continued in to XXXX. million, $X.X period $X.X quarter QX XXXX per higher

operations from the flow period to a operations to mostly cash last Turning was of to $X.X net negative QX deferred Cash positive million of and attributed QX XXXX. lower sheet. cash compared the QX in negative XXXX operations from year. revenue XXXX flow $X.X flow from to same balance decrease and statement compared flow cash income in The in QX in is XXXX in million

repurchased shares the quarter, in During the approximately third amount we $XX of million.

September million in remain $XXX million We of in third quarter XXXX, cash, marketable cash deposits ended repurchase the As and approximately securities. approximately plan. XX, bank our with $XX share equivalents,

conclude guidance. my remarks with I'll

revenue be million. $XX We range expect in quarter the to total to of for XXXX of fourth the $XX million

non-GAAP and of between expenses between fourth $X.XX XXXX to QX million net quarter earnings $X.XX XXXX $XX.X non-GAAP QX expect expect $XX We Also, to the per be million. to share diluted in we XXXX. operating be

the to the operator for questions. Operator, I'll please. call now over turn

Operator

we first will take Jefferies. And George question Notter our Instructions] [Operator from with

George Notter

to start, everybody, this very can. I you, to it We're I wish questions. guess luck as thinking the about stay all please to all with well wanted as maybe I hope best. definitely out and situation say Israel. difficult you just safe, maybe guess good and start goes in to we I through And

cloud seems a is can to But in that last improving the guess have of think Your know of cloud seems terms the be for I to really you another strength over weeks coming here. intensified attack that driving business? subscription layer of subscription little improvement? you I'm maybe looking detail and from the months. business in environment bit kind talk few I where what's about

Roy Zisapel

Okay.

for opening So your first, comments. thanks, George,

the new the And acquisition. scenario this Regarding web strong the seeing ability DDoS our growth of mentioned. mitigate sophisticated cloud, attacks like from is I've become to that logos common, that very, we're very core very

burden vectors war Russia activities of seeing following the we're in security, defense came Ukraine DDoS, and systems. a other on and new So that creates new application And and in market. the both, of and the level sophistication in that

they So customers understand sometimes their have we the the way hard at what insufficient. in are see their security by measures that or more and current happens looking industry more that peers to

extent, second, some And customers. were and advantage. are point as now we're creating more contribute business get enterprise And more to more the Cisco and Check on our to on in a definitely especially to last mention, cloud the Point, more is cloud that's agreement, the our openness as So towards have high-end, started Cisco, especially the well, the references strong I into would seeing we security more have, seen EEA, we solutions.

those there. be factors would So the X

George Notter

How out deal was I a some have about put New -- know know guys scrubbing there Zealand. I you services. in new

a deal there's with Can about that think how talk growth? I India, are contributing progressing? service you in those partnerships providers. to Is the

Roy Zisapel

Yes.

capabilities, serve seeing customers, have. is the current were sign their around to that they level agreements the world to understanding and MSSPs that some is insufficient. order solutions those to they we comments partnerships around there able way We're we're increase must of of do And seeing continue what tools, world. what long So the automation to in are carriers

India the leveraging mentioned on nodes assist and release the one, one them operation. they New press to cloud MSSP our basically You've where security our in Zealand their are

We're the because We service. it basically behind see share curtain allows that the motion technology the their of markets. or going very a gain that us MSSP, becoming good market to ones those forward the in significant deliver as MSSP

carrier using maybe they for will so so, existing actually would planning MSSP year promote if in customer you they to services. white migrate DDoS, that. tools positioned So market but their for [indiscernible], capable. first is migrate, over off the a our platforms generally to support we and the additional over base towards starting think We time, or a We're are label they uniquely sell leverage that, as are OEM to have capable, while a

very supporting partners trained like is Check operation well Our Nokia Cisco, in and Point.

same these for an can So us, in those markets. the lot support it's of And quickly it we to carriers. take a to extent, share ability believe,

Operator

our we next And Reimer with Chris will from take question Barclays.

Chris Reimer

further the that contribute management contributed have side Can will or measures you of cost mention the things? of some to

Roy Zisapel

whole. level things. We're for changed several ROI. and thought of And investment we doing marketing One, we did or looked sales the yield that a And consolidated as not investment. either the right at obviously, we've looked that we organization our places

the Second, we selling And investments would took overlay some or of measures in had. that I say, some it's maybe relationship. third-party more, we direct quota-carrying

out model to allocated invest and of of our and numbers costs that some operation, improve cloud those managers towards taken we've we've Third, taken coverage, success to and business, cloud more actually the the improve them security to towards R&D.

from align all, with continue to we've to measured the level expense. you the So these in Starting results all P&L. done as in the see steps the we steps, of And on revenue going third to profitability, the quarter, obviously, in business. organization mentioned, we're guidance, to And the see, of improve. because the our to do as expect Guy balance

Operator

our take And next & we question will Henderson Instructions] Alex Company. [Operator with Needham from

Alex Henderson

if I starting what safe with reserves in and hope to the up -- off the there's factor called also stays as by forward we bit you just But the that employees war point, little a of thanks whether from that's percentage more risk. outlook talk your can extended everybody were start a print, are talk all that so going time, your in Israel families that in if about that and but safe. a for me Let can saying is

Guy Avidan

Yes.

in these We terms increase. count functions, So of We've as of replaced, around company. the are this of head XX number reserve. today, people. employees X% total That's to in all expect don't in

any So business. on impact see the we don't

Alex Henderson

the I statistics. but I Perfect. to Didn't make be, expect sure had wanted there to

your that obviously talk can quarters. exchange on the a there last hedging a over about the or pressure going of and programs is rate simple how what's shekel of second The the for question, the -- reason little bit you lot couple under

Guy Avidan

Yes.

So already. we as is for hedged previously, time the earlier XXXX and being, discussed

some means said, year, of conclusion So strategy and the have better above a not to we that that, hedge, next will still impact the to will which lower hedged allude of That seen being year. hedging this will we FX have obviously, X OpEx. XXXX. room the We be

Alex Henderson

it expectations like And intentions. have in does spending and in some the pull-in Israel events in resulted seem

conditions that October? macro to is into you So little too showing environment bit? September Can it relatively in Or the talk from a stable? is is Or early any tell? that change to

Guy Avidan

the mentioned We some are we in prepared commentary are that seeing watching early and linearity. we signs,

before. this position We say, means also the better of the mentioned quarter, quarter in first than we're quarter month last in the a the that better let's X script macro-wise, that, that we versus quarters. think the It was

Roy Zisapel

threat from global, a in And seeing the the across so and across of importantly, also more in attacks Canada, of actually activity Israel, just all to Europe that, it's Western course, for to whether the world, we're but of U.S., on. landscape, lot add the

actually, the is solutions, a creating actually our and sense urgency, more we this perspective from of So demand think. criticality of geopolitical event

war So we to not all a acceleration there's be optimistic pull going be down that bit are a and in cycles. might from all, the cautiously actually actually of

Alex Henderson

Great. thanks of Thanks. pretty tour cloud in was war room that It And visited I say just you in when Israel for to me impressive. September. giving want your guys

Roy Zisapel

for You're welcome, Alex. Thanks comments. always your

Operator

questions this further there are And time. no at

I remarks. closing Roy Zisapel So to the for back now turn call Mr. will

Roy Zisapel

and you, day. Thank today, a attending everyone, Okay. have great for

Operator

and we and this thank Ladies conference gentlemen, concludes your you participation. today's call, for

may You disconnect. now

Radware (RDWR) 1 Nov 232023 Q3 Earnings call transcript